XO: Capital One

I am sending this appeal as a victim, and in direct relation to “Modernizing Consumer Protection in the Financial Regulatory System: Strengthening Credit Card Protections,” “Unfair Credit Card Practices and the Need for a Legislative Remedy,” HR 5244, and ongoing Deceptive and Predatory actions from the credit card industry. Last year, Steve Autrey testified before the House Financial Institutions and Consumer Credit Subcommittee: “Opening a new credit card and closing an account both hurt your credit score. That leaves consumers faced with sudden, unexplained interest rate hikes with no good options.” “The “‘fixed”’ 9.9 percent rate he had on his Capital One credit card for seven years was increased to 15.99 percent in 2007. In a letter, Capital One stated simply that the business environment had changed.” (04/2008) Congress Debates New Credit Card Law (redtape.msnbc.com) As a longtime customer of Capital One, this same situation of abuse recently happened to me. Now, “The business environment had changed” angle has been updated: “Due to extraordinary changes in the economic environment.” As a result, they are forcing a change to my credit card account terms – from a 10.9 percent Fixed to a 17.9 percent Variable (knowing that the Prime Rate was slashed so far during our current crisis that it will, in time, rise back up considerably – in increments.

Consequently, would it be logical to assume that within two years my previous 10.9 percent Platinum card might evolve into a 22 percent Platinum card? Like Steve Autrey, I could refuse the new terms. However, doing so (as he pointed out) would adversely affect my credit score and history, and also be detrimental to my ability in maintaining a positive credit standing. Please consider: Combined with an excellent credit score (732 at last check), where the CRAs also note No new accounts, No inquiries, No collections, and all “Pays As Agreed” accounts, my history with Capital One represents a customer of ten and one-half years (Aug. 1998 to present) who would seem to be considered top-tier: Pays As Agreed/Never Late (for years, paid three weeks early on every statement). A long history of exceeding the “Minimum Payment” ($23.00 due/Sends $165.00). For years, rarely exceeded a 50% usage of available credit.

Senator Carl Levin, in testimony before the House Financial Services Committee, supported goals of “[prohibiting] credit card issuers from hiking an interest rate and then applying it to a pre-existing card debt” (No Retroactive Interest Rates). As of 04/17/2009, if I do not close my account, the remaining balance will then be subject to a Retroactive Interest Rate. Further, aren’t these actions by Capital One (as well as many other credit card companies) the same as Preemptively Bypassing the will and intent of Congress before any new laws, measures, or rules can take effect?

This is an ultimate example of “Unfair and Deceptive” business models, and represents all that is wrong in our Deregulated “economic environment.” While these types of predatory practices have played an essential role in creating this financial collapse, it also clearly shows that, in spite of Congressional hearings and efforts, the same regressive and oppressive tactics are continuing – as a norm. Didn’t representatives from the major credit card companies recently promise changes as part of their testimony? Well, obviously, all that has changed are their presentations and definitions. In December of 2008, the Richmond Times-Dispatch noted: “The bailout money – in the case of Capital One Financial Corp., $3.56 Billion of taxpayer funds – is meant to encourage financial firms to lend more money.” Wondering: since Capital One received those billions in taxpayer-funded aid, have they lent more money? Or, have they gone out and bought other banks, while going after even their best customers – like vultures?

Judith of Oakdale, MN (02/12/09)
After years with Capital One and an excellent record, I opened up the mail today to find they are increasing my fixed rate of 7.9% to 17.9%! Speaking to a supervisor was useless, she just parroted the same lame statement about the economic climate. As I told them, this is a blatant attempt to gouge customers before a new law forbidding such actions takes effect in July! I believe this action by Capital One deserves a Class Action Suit.

Brian of Dublin, CA (02/12/09)
Add me to the list of those who have received a notice from Capital One in the past week advising of changes to terms of service. My APR will go from 6.99% to a ridiculous, usurious 29.4%! Not a textbook example of how to treat a 10 year Platinum customer with a FICO score of 760+ who has never missed a payment. I’m going to transfer my balance to another card and stick this card in the drawer indefinitely. This move absolutely defies logic.

Jennifer of Nuevo, CA (02/12/09)
Capital one decided to raise my rate from 6.9% to 15.9%. They say it is due to unforseen circumstances. I have never missed a payment and I have been a long time customer. This is going to make the economy even worse now. How can they raise rates over 100% on existing balances? This is going to abolish the middle class. [Emphasis Added 08/28/2013:]The rich don’t need credit and the poor can’t get it. If it was not for the middle class the credit card companies would not be in business.

Greg of Ladera Ranch, CA (02/11/09)After being a loyal (NEVER late) customer for over 12 years, out of the blue they are raising my credit card rate from 13.69% to 29% with no explanation given. I had just recently taken advantage of their low-rate balance transfer offers too! I now have to scramble to pay this balance off or risk paying these insane 29% rates. I now have to go to extreme measures to get this card balance paid off immediately which is not easy to do in this tight credit environment. I will never be a Capital One customer ever again. This practice could financially destroy consumers.

Once again, this is an appeal – for help. Common citizens have very little recourse when attacked in such an egregious manner from corporate entities. It is then, especially, that we look to you, as our Representatives, for reprieve – and Justice. How many millions of people has Capital One done this to – since receiving $3.56 billion in bailout aid? As Judith of Oakdale, MN stated, this would seem to be, in the least, a situation begging for Class Action. Yet, where are the Headlines? Why isn’t this in the news? And we, the taxpaying commoners continue crying out, because we need you to stand up – For All of Us.

I look forward to your response in this nationwide matter.
With Utmost Sincerity,

“Consumers cannot wait til 2010, not in this economy.” No doubt. The credit card companies were given a gaping window before any of the new regulations would take effect. Then, they were politely asked to refrain from gouging their customers in the interim. Isn’t that like asking the founder of the most successful PayDay Loan company (seen on national commercials promoting his predatory bait as if it derives from the utmost honor and professionalism) to just come forward and admit how he really feels about his prey? Can We Trust Government to Get Regulation Right

Update (05/02): In relation to the Credit Cardholders’ Bill of Rights, Arianna Huffington notes that “despite the desperate urgency of the situation, all but one of the consumer-friendly provisions of the bill won’t take effect for a year…and the bill doesn’t contain any cap on credit card interest rates.” So, there is an ongoing national crisis of predatory actions taking place by vulturous companies who are gouging every customer they can before new measures take effect in July of 2010. The President and Congress intervene – and new measures are passed – which will take effect in May/June of 2010 (leaving out future caps on interest rates – as well as any emergency halts to increases on those rates in the present). Wow! You really showed them. Most importantly, you really showed us. I guess we can now rest assured that we won’t be victimized further in the interim. Yeah, and we were all born yesterday.

Thank you for your efforts, Senator Sanders. We are directly in the middle of a national crisis regarding outright fraud and overt predatory actions from the credit card industry, and “The Credit Cardholders’ Bill of Rights” did not even make any measures or rules immediate (beyond a 45-day notice). Then, the FED rejected requests for capping interest rates or banning Retroactive Interest Rates – which many millions of us are presently being subjected to. As I wrote before, again, we see the Truth. When it all came down to the most revealing point, their lack of critical actions, what we had been hearing and witnessing previously resulted as shallow words and staged posturing. Maybe in the Senate, a few people like you can stand out and make something happen – for the present tense – for all of us? It’s our last chance (and hope).

Update 05/09: Capital One is currently luring in new customers with various 0% offers. In addition, they are flooding their presently gouged/trapped customers with 0% check and balance transfer offers.

1) If the “economic environment” is so detrimental, how could they afford all these new 0% customers – even for six or twelve months?

2) Why would Capital One flood their remaining customers (the ones they have attacked as predators) with 0% offers?Bait and Switch:

In retail sales, a bait and switch is a form of Fraud in which the party putting forth the Fraud lures in customers by advertising a product or service at an unprofitably low price, then reveals to potential customers that the advertised good is not available, but that a substitute is.

1) The new customers are Baited (reeled in), while the old customers’ rate increases “cover the spread” before the (definite) Switch/Change In Terms hits the new customers.

2) The remaining (old) customers are further Baited with a way to survive their present gouging – while being assured (secretly) that they will be hit again, once the time (of the next Switch) is right: “Due to your current debt level, we have decided to change your 0% Fixed agreement to a 23.99% Variable.” And the cycle continues.

Update (05/19): It’s Still Over.Nothing Immediate. No Caps On Interest Rates.
Consumers Are Sitting Ducks Until Next Year. Yet:

Senator Reid: “We stood up for consumers and stood up to abusive credit card companies. We said that big banks can no longer take advantage of hardworking Americans.” Off The Record: “Well, you know, (like in December 08′) we are going to trust them to not go after their customers as predators (on a third wave) before these new measures go into effect. And, despite giving them a year’s head start, we are certain they will not come up with other ways to bypass everything we have accomplished.”

“Citi has boosted interest rates on some cards to as high as 29.99 percent, according to a Credit Suisse report. Chase raised rates as high as 23.99 percent, and also increased balance transfer fees to 5 percent of a transaction with a $10 minimum, from 3 percent with a $5 minimum, the report says. Capital One has kept rates steady for now, but warned consumers they will be increasing over the next year.”

“‘Issuers during this crisis should be using this period to adapt to the new rules about to take effect, not raising rates and changing terms on those who are already meeting their obligations,’ Rep. Carolyn Maloney, D-N.Y., the prime sponsor of the bill.”

Update (02-23-2013): More than three years since Predatory giants (like Capital One) caused uproars from millions, their practices remain the same. If my local credit union assesses a credit score of 796 combined with a perfect credit history as worthy of a new credit card account with more than double the credit limit and half the interest rate of a card I have maintained (in the most exemplary fashion) with Capital One for almost fifteen years, why would Capital One refuse to either lower the interest rate or raise my credit limit (on the same card/account they targeted along with almost everyone in the nation during their “Due to the Economic Environment” scam of 2008 and 2009)? Because a certain “Environment” continues – without repercussions (they can’t just laugh at).

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19 Responses to XO: Capital One

This is the most outrageous thing in the world. Why is it that Senator Sanders of Vermont seems to be the only person on capitol hill who is willing to do anything about this? Other members just pay lip-service to wanting to repair this continuous evil being vented against the middle class by the corporations. I have made it my top priority to challenge any credit card bill I receive that has questionable charges on it. More than once I have had to contact the issuers of my credit cards and convince them that I am not willing to accept an arbitrary hike in the interest rate on my card. Remember one thing America: always be willing to fight injustice regardless of the source.

Thanks for commenting, Petrov.
As previously noted, this is a nationwide crisis emanating from worldwide fraudulent practices. The House of Representatives passed the Credit Cardholders’ Bill of Rights, and it did not even include any immediate measures (beyond a 45-day notice that the predators are about to gouge/cut you again). Now, the last chance resides in the Senate, or Permanent Subcommittee On Investigations. You can be assured that by the time July of 2010 arrives, the credit card industry will be ready with all new angles.

“In my view, when a credit card company charges 25 or 30 percent interest rates, they are not engaged in the business of “making credit available” to their customers. They are involved in extortion and loan-sharking. This is especially true at a time when the taxpayers of this country have provided many hundreds of billions of dollars to bail out Wall Street, and when the Federal Reserve is providing them with near zero percent interest loans.”

Thank you, SeaClearly, for seeing that 99% of not-for-profit credit unions do not participate in these abusive credit card practices. The irony will be clear when the banks scramble to change their policies in 2010 as a result of new legislation, the ethical behavior will be business as usual at the not-for-profit cooperative credit unions. They are banking-organic.

Knowing this is the simple truth. We created a project called the American Debt Relief Challenge. Our goal is to help Americans who need relief from these high-interest cards right now.

As a result of our challenge to credit unions to help consumers, the average consumer is saving $200 a month, over the life of the card with the same amortization, by moving their debt from the big bank to their local credit union.

Please tell your friends and family. If they need relief from their high interest credit card, it’s ok to ask for help at their credit union. We’ve already saved consumers $5 million. Our goal is to save consumers $300 million!

You are quite welcome, Jamie. The House and Senate let us all down by not making any new measures immediate – in spite of the critical situation. As a partial result, I have decided to start promoting a new message relating to the credit card industry along the lines of, if we are not able to sustain without credit cards, let’s at least turn our backs on all the major players and go local via credit unions. In relation, your “Challenge” organization has, of course, been an inspiration. And, I will keep links to your site/goals active – in addition to sharing them in other fashions.

Throughout history, usury has been decried by writers, philosophers, and religious leaders. Aristotle called usury the “sordid love of gain,” and a “sordid trade.” Thomas Aquinas said it was “contrary to justice.” In The Divine Comedy Dante assigned usurers to the seventh circle of hell. Deuteronomy 23:19 says, “thou shalt not lend upon usury to thy brother.” Ezekiel 18:10 compares a usurer to someone who “is a thief, a murderer…defiles the wife of his neighbor, oppresses the poor and needy, commits robbery, does not give back a pledge, raises his eyes to idols, does abominable things.” The Koran is equally unequivocal: “God condemns usury.” And it goes on to say that “those who charge usury are in the same position as those controlled by the devil’s influence.”

Up until the late 1970s, America’s laws followed suit, keeping interest rates in check. Then, in 1979, a Supreme Court ruling allowed banks to charge the top interest rate allowed by the state where a bank is incorporated as opposed to the borrower’s home state. Hoping to lure banks’ business, states like South Dakota and Delaware repealed their usury laws — and off we went. That same year, Congress passed the Depository Institutions Deregulation and Monetary Control Act which, among other things, allowed federally chartered savings banks and loan companies to charge any interest rates they chose — putting us on the path that led us to today, where banks routinely gouge their most vulnerable customers.

“Federal Reserve Chairman Ben Bernanke . . . told Congress that accelerating the effective date of credit card reform legislation would be good for consumers — but that credit-card issuers need more time to adjust to the new rules.” And, we are all so glad that he is now serving a new term – while looking out for the same corporations he looked out for during the Bush years.

National Usury Legislation: Major financial institutions have, in many ways, become nothing less than loan-sharking operations. Today, millions of Americans who pay their bills on time are now forced to pay 25 or 30 percent interest rates. That is not only obscene but, according to every major religion, immoral. Banks cannot be allowed to engage in usury and charge outrageous interest rates. We must cap interest rates for private banks at the same level as we do for credit unions – 15 percent except under exceptional circumstances. (Senator Bernie Sanders)